Toronto,Ā May 16: The Canadian government has announced a significant personal income tax cut to ease financial stress on low and middle-class income families. The move is one of the first legislative priorities of Prime Minister Mark Carney’s new cabinet, which could provide much-needed breathing room for Canadians struggling with high inflation.Ā “This tax cut will help hard-working Canadians keep more of their pay cheques to spend where it matters most. This measure is expected to deliver over USD 27 billion in tax savings to Canadians over five years, starting in 2025-26,” Finance Minister Francois-Philippe Champagne said in a statement.
Per the government, the lowest personal income tax rate will be reduced from 15 per cent to 14 per cent from July 1.
Listing the economic benefits of the new middle-class tax cut, the Minister noted the move would provide support amid ongoing economic challenges, including trade uncertainties.
“Every Canadian should be able to afford necessities, feel secure, and get ahead financially–and this tax cut will help them do just that. As Canadians continue to feel the impact of ongoing challenges, including trade and tariff uncertainties, they should be able to keep more of what they earn to help build a stronger future and a more resilient Canada,” Champagne said.
The government said that since the tax cut starts mid-year, the average rate for 2025 will be 14.5 per cent, and it could help two-income households save up to USD 840 per year by 2026. The relief targeted at people earning under USD 114,750, especially those earning below USD 57,375 in 2025 and is expected to benefit nearly 22 million Canadians.